The proposed bill, titled the "Housing Flexible Spending Account Act of 2025," aims to create a state-administered program that allows Rhode Island employers with fewer than fifty employees to contribute to a housing flexible spending account (H-FSA) for their employees. The contributions, which must total at least $5,000 per year for all eligible employees, will be used for qualified housing expenses such as rent, mortgage payments, down payments for first-time homebuyers, utilities, and property taxes. The program is entirely employer-funded, and employee contributions are not permitted. Additionally, employer contributions will be treated as a pre-tax benefit and exempt from state income tax.

The bill also includes provisions for compliance and enforcement, ensuring that employers do not reduce employee wages as a condition for making H-FSA contributions. Employers found in violation of these requirements may face penalties, including repayment of tax benefits and fines. The program will begin with a two-year pilot phase, during which data will be collected to assess its effectiveness. An annual report will be submitted to the General Assembly to evaluate the program's performance and make recommendations for future adjustments. The act is set to take effect on January 1, 2026.